New Economics Papers
on Efficiency and Productivity
Issue of 2013‒08‒05
23 papers chosen by

  1. The effects of outsourcing on firm productivity: Evidence from microdata in the Netherlands By Henri de Groot; Jan Möhlmann
  2. Productivity and age: Evidence from work teams at the assembly line By Weiss M.; Börsch-Supan A.
  3. Green investment strategies and export performance: A firm-level investigation By Antonietti,Roberto; Marzucchi,Alberto
  4. Positive Effects of Ageing and Age-Diversity in Innovative Companies Ð Large Scale Evidence on Company Productivity By Uschi Backes-Gellner; Stephan Veen
  5. Corruption, Accountability and Efficiency. An Application to Municipal Solid Waste Services By Graziano Abrate; Federico Boffa; Fabrizio Erbetta; Davide Vannoni
  6. Efficiency and Environmental Factors in the US Electricity Transmission Industry By Llorca, Manuel; Orea, Luis; Pollitt, Michael
  7. Productivity Growth and Capacity Utilization By Gu, Wulong<br /> Wang, Weimin
  8. FDI and Total Factor Productivity Growth: New Macro Evidence By Botirjan Baltabaev
  9. Trade and technology: New evidence on the productivity sorting of firms By Bertschek, Irene; Hogrefe, Jan; Rasel, Fabienne
  10. The Machine Tool Industry in Italy: Industrial Innovations and Performances By Fabio Campanini; Serena Costa; Paolo Rizzi
  11. From guesstimates to GPStimates : land area measurement and implications for agricultural analysis By Carletto, Calogero; Gourlay, Sydney; Winters, Paul
  12. Banking Crises and “Japanization”: Origins and Implications By Kawai, Masahiro; Morgan, Peter
  13. It's Not Structural Change, but Domestic Demand: Productivity Growth in Japan By Akira Kohsaka; Jun-ichi Shinkai
  14. Impact of Eco-Labelling on Indonesia's Smallholder Coffee Farmers By Nuva; Yusif; Nia Kurniawati H.; Hanna
  15. Offshoring and productivity revisited: A Time-Series Analysis By Pablo Agnese
  17. Corporate governance of banks: A survey By Jakob de Haan; Razvan Vlahu
  18. Technology Adoption and Dissemination in Agriculture: Evidence from Sequential Intervention in Maize Production in Uganda By Tomoya Matsumoto; Takashi Yamano; Dick Sserunkuuma
  19. A Study of Lessons Evaluation by the Diet’s Teacher Trainees for Improvement of Teaching Efficiency in Imphal West District of Manipur By Taorem Surendra Singh
  20. The Impact of Patenting Activity on the Financial Performance of Malaysian Firms By Farha Ghapar; Robert Brooks; Russell Smyth
  21. Diversification Strategies and Firm Performance: A Sample Selection Approach By E. Santarelli; H. T. Tran
  22. Allocative Efficiency, Mark-ups, and the Welfare Gains from Trade By Thomas J. Holmes; Wen-Tai Hsu; Sanghoon Lee
  23. The Effects of Private Equity on Targets: Majority versus Minority Investments By Erich Battistin; Paolo Bortoluzzi; Fabio Buttignon; Martina Serafini; Marco Vedovato

  1. By: Henri de Groot; Jan Möhlmann
    Abstract: International outsourcing is an important aspect of economic globalization. Since outsourcing leads to more specialization, it is expected to reduce production costs and to increase productivity. <span>This study uses microdata on Dutch firms to investigate the effects of international and domestic outsourcing on firm productivity at the firm level. It is based on a unique survey on outsourcing covering the period 2001–2006. The survey allows us to distinguish between domestic and international outsourcing and between outsourcing of core and support activities. We study the effects of these different types of outsourcing on labour productivity and total factor productivity (TFP). The results show that, without adjusting for firm size, more productive firms are more likely to outsource. When we adjust for firm fixed effects, the results suggest that international outsourcing of core functions decreased TFP and domestic outsourcing of support functions increased TFP.</span>  
    JEL: L24 D24
    Date: 2013–08
  2. By: Weiss M.; Börsch-Supan A. (ROA)
    Abstract: We study the relation between workers age and their productivity in work teams, based on a new and unique data set that combines data on errors occurring in the production process of a large car manufacturer with detailed information on the personal characteristics of workers related to the errors. We correct for non-random sample selection and the potential endogeneity of the age-composition in work teams. Our results suggest that productivity in this plant which is typical for large-scale manufacturing does not decline at least up to age 60.
    Keywords: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; Human Capital; Skills; Occupational Choice; Labor Productivity;
    JEL: D24 J14 J24
    Date: 2013
  3. By: Antonietti,Roberto; Marzucchi,Alberto
    Abstract: In this paper we empirically investigate the relationship between investments in environmentally-oriented equipment and firms’ export performance. Drawing on Porter hypothesis and firm heterogeneity theory, we adopt a structural model where first we estimate the impact of green investment strategies on the level of productive efficiency (TFP), and second we assess whether induced productivity influences the extensive and intensive margin of exports. Relying on a rich firm-level dataset on Italian manufacturing, our results show that firms with higher productivity, induced among other factors by green investment involving environmental protection and reduction in the use of raw materials, have increased commitment to, and profits from, exports, especially towards countries adopting a more stringent environmental regulatory framework. Our evidence provides a ‘green investment-based’ explanation for the link between TFP-heterogeneity and trade.
    Keywords: Exports, Firm Heterogeneity, Green Investment Strategy, Total Factor Productivity
    JEL: Q55 Q56 F14 F18
    Date: 2013–07–31
  4. By: Uschi Backes-Gellner (Department of Business Administration, University of Zurich); Stephan Veen (Disney Research Zurich)
    Abstract: This paper investigates how age diversity within a companyÕs workforce affects company productivity. It introduces a theoretical framework that helps to integrate results from a broad disciplinary spectrum of ageing and diversity research to derive empirically testable hypotheses on the effects of age diversity on company productivity. It argues that first the balance between costs and benefits of diversity determines the effect of age diversity on company productivity and that second the type of task performed acts as a moderator. To test these hypotheses, it uses a large-scale employer-employee panel data set (the LIAB.) Results show that increasing age diversity has a positive effect on company productivity if and only if a company engages in creative rather than routine tasks.
    Keywords: Age Diversity, Company Performance, Productivity in Innovative Industries, Aging Societies
    Date: 2013–08
  5. By: Graziano Abrate (Department of Business Management and Environment, University of Eastern Piedmont); Federico Boffa (Department of Law and Economics, University of Macerata); Fabrizio Erbetta (Department of Business Management and Environment, University of Eastern Piedmont); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: This paper explores the link between accountability, corruption and efficiency in the context of a career concern model where politically connected local monopolies are in charge of the provision of a local public service. We find that both corruption and a low degree of accountability induce managers to reduce effort levels, thereby contributing to drive down efficiency. Our predictions are tested using data on solid waste management services provided by a large sample of Italian municipalities. The results of the estimation of a stochastic cost frontier model provide robust evidence that high corruption levels and low degrees of accountability substantially increase cost inefficiency. Finally, we show that the negative impact of corruption is weaker for municipalities ruled by left-wing parties, while the positive impact of accountability is stronger if the refuse collection service is managed by limited liability companies.
    Keywords: corruption, accountability efficiency, solid waste.
    JEL: D24 D72 D73 L25 Q53
    Date: 2013–07
  6. By: Llorca, Manuel; Orea, Luis; Pollitt, Michael
    Abstract: The electricity industry in most developed countries has been restructured over recent decades with the aim of improving both service quality and firms’ performance. Regulated segments (e.g. transmission) still provide the infrastructure for the competitive segments and represent a notable amount of the total price paid by final customers. However there is a lack of empirical studies that analyze firms’ performance in the electricity transmission sector. We conduct an empirical analysis of the US electricity transmission companies for the period 2001-2009. We use stochastic frontier models that allow us to identify determinants of firms’ inefficiency and to control for weather conditions, potentially one of the most decisive uncontrollable factors in electricity transportation. Our results suggest that there is room for improvement in the performance of the US electricity transmission system. Regulators should also take into account that more adverse conditions generate higher levels of inefficiency and that achieving long-term efficiency improvements tends to deteriorate firms’ short-term relative performance.
    Keywords: electricity transmission, heteroscedastic stochastic cost frontiers, inefficiency determinants
    JEL: D22 L51 L94
    Date: 2013–05–30
  7. By: Gu, Wulong<br /> Wang, Weimin
    Abstract: This paper presents a non-parametric approach for adjusting the multifactor productivity growth (MFPG) measure for variations in capacity utilization over time. In the framework developed here, a capital utilization measure is derived from the economic theory of production and is estimated by comparing the ex-post return with the ex-ante expected return on capital. The non-parametric approach is then compared with the parametric approach and the standard growth accounting framework. Both the non-parametric and parametric approaches correct for the cyclical bias in the standard MFPG measure, but the non-parametric approach offers more practical adjustment for capacity utilization, because it is easier to implement and more in line with the non-parametric approach long used by statistical agencies and researchers.
    Keywords: Economic accounts, Productivity accounts
    Date: 2013–07–23
  8. By: Botirjan Baltabaev
    Abstract: Although the role of FDI in facilitating technology transfer is well-known in the literature, empirical evidence regarding the effect of FDI on growth is mixed. The contradictory results in the literature may be due to the failure to account for endogeneity and for the abortive capacity of the hosting countries. Using panel data for 49 countries over the period 1974-2008 and the existence of Investment Promotion Agencies in the receiving countries as an instrument, our results show that increased FDI stock leads to higher productivity growth. We also find a significant positive effect on the interaction between FDI stock and distance to the technological frontier, suggesting that the ability of technologically backward countries in absorbing technologies developed at the frontiers increases as more FDI stock is accumulated.
    Keywords: FDI, TFP growth, technological transfer, technology gap, system GMM
    JEL: F21 F23 O33
    Date: 2013–07
  9. By: Bertschek, Irene; Hogrefe, Jan; Rasel, Fabienne
    Abstract: Using a unique German firm-level data set, we provide empirical evidence for a productivity sorting along two dimensions: international activity and technology choice. We consider domestic and exporting firms and measure technology choice by firms' actual use of advanced information technology (IT). For manufacturing firms, the observed sorting pattern is consistent with recent theories of heterogeneous firms and technology choice: Only the relatively more productive ones among internationally active firms are also highly technology intensive. For service sector firms we find similar evidence, yet the results seem to depend on the trade cost of certain services. In general, recent theoretical advances regarding trade and technology adoption thus seem to better fit the manufacturing sector. --
    Keywords: exports,productivity,sorting,information technology,firm-level data
    JEL: F14 F23 L23
    Date: 2013
  10. By: Fabio Campanini (DISCE, Università Cattolica); Serena Costa (DISCE, Università Cattolica); Paolo Rizzi (DISCE, Università Cattolica)
    Abstract: The machine tool industry has a leading role in the Italian manufacturing system, above all in Northern Italy. This industrial branch is a strategic intermediate point in many manufacture dies, with an average innovation intensity higher than that of many other industrial branches. This work investigates if and in which way the innovation and the R&D processes carried out in the sector firms affect their productivity. We built a significant sample, which answered a questionnaire based on the CIS (Community Innovation Survey). Also a regional geographic dimension is used, to test the presence of specific local effects. Results show a positive and strong contribution from human capital to productivity, while, in the short term, physical capital have a negative impact, a result probably influenced by the economic crisis.
    Keywords: Innovation; Machine tool industry; Firm productivity; Regions.
    JEL: L1 L64 O3
    Date: 2013–05
  11. By: Carletto, Calogero; Gourlay, Sydney; Winters, Paul
    Abstract: Land area measurement is a fundamental component of agricultural statistics and analysis. Yet, commonly employed self-reported land area measures used in most analysis are not only potentially measured with error, but these errors may be correlated with agricultural outcomes. Measures employing Global Positioning Systems, on the other hand, while not perfect especially on smaller plots, are likely to provide more precise measures and errors less correlated with agricultural outcomes. This paper uses data from four African countries to compare the use of self-reported and Global Positioning Systems land measures to (1) examine the differences between the measures, (2) identify the sources of the differences, and (3) assess the implications of the different measures on agricultural analysis focusing on the inverse productivity relationship. The results indicate that self-reported land areas systematically differ from Global Positioning Systems land measures and that this difference leads to potentially biased estimates of the relationship between land and productivity.
    Keywords: E-Business,Rural Development Knowledge&Information Systems,Economic Theory&Research,Roads&Highways,Science Education
    Date: 2013–07–01
  12. By: Kawai, Masahiro (Asian Development Bank Institute); Morgan, Peter (Asian Development Bank Institute)
    Abstract: Japan’s “two lost decades” perhaps represent an extreme example of a weak recovery from a financial crisis, and are now referred to as “Japanization.” More recently, widespread stagnation in advanced economies in the wake of the global financial crisis led to fears that Japanization might spread to other countries. This study examines the dimensions of Japanization—including low trend growth, debt deleveraging, deflation and massive increases in government debt—and analyzes their possible causes—including inadequate macroeconomic policy responses, delayed banking sector restructuring, inadequate corporate investment, loss of industrial competitiveness, a slowdown in total factor productivity (TFP) growth due to excessive regulation and economic rigidities, and an aging society.
    Keywords: economic growth; total factor productivity; inflation; demographics; credit growth; banking crises
    JEL: E20 E31 E51 F31 G01
    Date: 2013–07–30
  13. By: Akira Kohsaka (Professor, School of International Studies, Kwansei Gakuin University); Jun-ichi Shinkai (Specially Appointed Researcher, Osaka School of International Public Policy, Osaka University)
    Abstract: This paper examines the role of structural change in productivity growth in Japan, focusing on her recent "lost decades", with reference to the United States. Japan is now known to have a sharp slowdown in productivity growth in the 1990s, when we find a slowdown in intra-industry productivity growth is the main cause. We also find that the contribution of inter-industry reallocation of employment is almost zero in the 1990s and even significantly negative in the 2000s. Interestingly, the same holds true in the US, too. We will argue that structural change or the lack of it may not be responsible for the lost decades in Japan, and that these contrasting outcomes between Japan and the US come from a common factor.
    Keywords: Japan's lost decades, productivity growth, structural change
    JEL: O4
    Date: 2013–08
  14. By: Nuva (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University); Yusif (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University); Nia Kurniawati H. (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University); Hanna (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University)
    Abstract: In terms of value, coffee which is mostly grown on smallholder farms, ranked fourth in the exports of food and agricultural commodities of Indonesia in 2008. Together with state-owned and private plantations, they add up to 969,082 ha of area harvested – the second largest in the world. Nevertheless, Indonesia ranked only seventh in the world in terms of yield per hectare. In addition, the coffee sector is facing many problems related to environment and its sustainability. Eco-labelling can be a solution to indirectly increase productivity and solve environmental problems brought about by coffee cultivation through better farming techniques imposed by eco-labelling organizations. This research studies the impact of eco-labelling implementation by Indonesia’s smallholder coffee farmers using financial analysis. Financial analysis was used to compare the profitability of eco-labelling and non-eco-labelling smallholder coffee farms. Descriptive statistical analysis was also used to present the stakeholders’ and farmers’ perceptions of eco-labels in the coffee sector. To get the primary data, survey and personal in-depth interviews were conducted. Findings show that eco-labelling in the coffee sector is profitable as evidenced by the results of cash flow analysis for both eco-labelled and non-eco-labelled Arabica and Robusta coffee farms. Nevertheless, problems still exist in the implementation of coffee certification i.e., limited support from government, quite difficult to implement due to low educational level of farmers and lack of awareness of advantages of eco-labels, the differences of certification scheme required by different coffee-importing countries, and financing problem for the certification fee.
    Keywords: pollution, Eco-labelling, Indonesia
    Date: 2013–03
  15. By: Pablo Agnese (Department of Economics of the Duesseldorf University of Applied Sciences)
    Abstract: The subject of offshoring and productivity has not yet received the attention it deserves. Here I propose a simple framework for estimating the contribution of these strategies to the growth rate of labor productivity from a time-series perspective. This framework is then used to assess the impact of offshoring on skill upgrading and the labor share. For both empirical questions I take up the study of a group of Japanese industries during the recent years of slow growth. The results should be interpreted with caution yet clearly suggest that offshoring can improve labor productivity in the semiconductors industry. Moreover, offshoring is found to be the source of important changes among industries with different skills (skill upgrading) and an important factor behind the fall of the labor share.
    Abstract: Der Zusammenhang zwischen Ausgliederung von Unternehmensprozessen in andere Länder (Offshoring) und Produktivität hat noch nicht die Aufmerksamkeit in der wissenschaftlichen Debatte gefunden, die er verdient. Dieser Beitrag stellt eine einfache Methode vor, wie sich der Wachstumsbeitrag zur Arbeitsproduktivität von mit Outsourcing verbundenen Strategien ökonometrisch im Zeitablauf schätzen lässt. Der vorgeschlagene Ansatz wird dann dazu verwendet, die Wirkung von Offshoring auf die Qualifikationsentwicklung und die Lohnquote zu bestimmen. Zur Beantwortung der beiden empirischen Fragen verwendet die Studie ausgewählte japanische Branchen während der Phase geringen Wachstums in jüngerer Zeit. Die gefundenen Ergebnisse zeigen, dass Offshoring die Arbeitsproduktivität in der Halbleiterindustrie verbessert hat. Sie sollten jedoch mit der üblichen Vorsicht interpretiert werden. Darüber hinaus ist Offshoring eine wesentlicher Grund für den Wandel von Branchen mit unterschiedlicher Qualifikationszusammensetzung (verbesserte Durchschnittsqualifikation) und eine wichtige Determinante der gesunkenen Lohnquote.
    Keywords: Offshoring, Labor Productivity, Skill Upgrading, Labor Share, Arbeitsproduktivität , Qualifikation , Lohnquote , Outsourcing
    JEL: J23 J24 E25
    Date: 2013–07
  16. By: Author-Name: Jakob B Madsen; James B. Ang
    Abstract: The spectacular growth rates in the Asian miracle economies (AMEs) are often attributed to factor accumulation whilst ignoring the forces that have been responsible for it. Using data for six AMEs over the period from 1953 to 2009, this paper extends the conventional growth accounting exercise by allowing for the population growth drag and endogeneity of capital deepening, savings, labor force participation and schooling. It is shown that growth has been predominantly a result of the demographic transition and productivity growth, where the latter has been driven by R&D, knowledge spillovers through imports and R&D absorptive capacity.
    Keywords: Asian growth miracle; endogenous factor accumulation.
    JEL: O30 O40 O53
    Date: 2013–07
  17. By: Jakob de Haan; Razvan Vlahu
    Abstract: This paper reviews the empirical literature on the corporate governance of banks. We start by highlighting the main differences between banks and non-financial firms and focus on three characteristics which make banks special: (i) regulation, (ii) the capital structure of banks, and (iii) the complexity and opacity of their business and structure. Next, we discuss the characteristics of corporate governance in banks and how they differ from the governance of non-financial firms. We then review the evidence on three governance mechanisms: (i) boards, (ii) ownership structures, and (iii) executive compensation. Our review suggests that some of the empirical regularities found in the literature on corporate governance of nonfinancial institutions, such as the positive (negative) association between board independence (size) and performance, do not hold for banks. Also, existing work provides less than conclusive results regarding the relation between different governance mechanisms and various measures for banks’ performance. We discuss potential explanations for these mixed results.
    Keywords: banking; governance; boards; bank ownership; executive remuneration
    JEL: G21 G34 G35
    Date: 2013–07
  18. By: Tomoya Matsumoto (National Graduate Institute for Policy Studies); Takashi Yamano (National Graduate Institute for Policy Studies); Dick Sserunkuuma (Makerere University)
    Abstract: We use a randomized control trial to measure how the free distribution of modern inputs for maize production affects their adoption in the subsequent season. Information collected through sales meetings where modern inputs were sold revealed that the average purchase quantity of free-input recipients was much higher than that of non-recipients; that of the neighbors of recipients fell in-between. Also, credit sales had a large impact on purchase quantity, and the yield performance of plots where the free inputs had been applied positively affected the purchase quantities of both recipients and the neighbors with whom they shared information on farming.
    Date: 2013–07
  19. By: Taorem Surendra Singh
    Abstract: Elementary teacher education is also one of the most important educations, which helps teacher to equip well with modern teaching skills, methods, and teaching technology for effective teaching learning process for quality elementary school education. The realization of objectives of Sarva Shiksha Abhiyan (SSA) is possible mainly, when the effective and efficient teachers are teaching in the classroom, where students can learn without any burden. Therefore, the article tries to find out the quality status of elementary teacher training given at DIET (District Institute of Educational Training), Imphal West District by collecting the opinion of teacher trainees during the internship course. Key words: Teaching, Teaching Efficiency, Lesson evaluation, and DIET Teacher Trainees
    Date: 2013–03
  20. By: Farha Ghapar; Robert Brooks; Russell Smyth
    Abstract: This study analyzes the relationship between patenting activity and financial performance at the Malaysian firm level for firms that have been granted patents in Malaysia and the United States of America. We adopt the patent renewal and profit maximization model as our theoretical underpinning for this study. The patenting activity variables are measured based on the patent renewal system and the financial performance variables are measured based on the profit margin. The sample is divided into manufacturing and non-manufacturing firms. We utilize a panel dataset spanning from 1994 to 2008 and the model is estimated using panel least squares, fixed effects, random effects and generalized method of moments with various types of effects specifications and transformations. The key finding from the empirical study is that there is a significant relationship between patenting activity and financial performance at the Malaysian firm level, but that the impact is rather small and that the signs on the coefficients are mixed. This result may reflect the level of competition that the firms faced over the period of the study, even though patenting is well known for giving firms some monopoly power.
    Keywords: Patenting, patent renewal, firm financial performance, panel data model
    Date: 2013–07
  21. By: E. Santarelli; H. T. Tran
    Abstract: This paper is based upon the assumption that firm profitability is determined by its degree of diversification which in turn is strongly related to the antecedent decision to carry out diversification activities. This calls for an empirical approach that permits the joint analysis of the three interrelated and consecutive stages of the overall diversification process: diversification decision, degree of diversification, and outcome of diversification. We apply parametric and semiparametric approaches to control for sample selection and endogeneity of diversification decision in both static and dynamic models. After controlling for industry fixed-effects, empirical evidence from firm-level data shows that diversification has a curvilinear effect on profitability: it improves firms’ profit up to a point, after which a further increase in diversification is associated with declining performance. This implies that firms should consider optimal levels of product diversification when they expand product offerings beyond their core business. Other worth-noting findings include: (i) factors stimulating firms to diversify do not necessarily encourage them to extend their diversification strategy; (ii) firms which are endowed with highly skilled human capital are likely to successfully exploit diversification as an engine of growth; (iii) while industry performance does not influence profitability of firms, it impacts their diversification decision and degree.
    JEL: L21 L25 C14 C23
    Date: 2013–07
  22. By: Thomas J. Holmes; Wen-Tai Hsu; Sanghoon Lee
    Abstract: This paper develops an index of allocative efficiency that depends upon the distribution of mark-ups across goods. It determines how changes in trade frictions affect allocative efficiency in an oligopoly model of international trade, decomposing the effect into the cost-change channel and the price-change channel. Formulas are derived shedding light on the signs and magnitudes of the two channels. In symmetric country models, trade tends to increase allocative efficiency through the cost-change channel, yielding a welfare benefit beyond productive efficiency gains. In contrast, the price-change channel has ambiguous effects on allocative efficiency.
    JEL: D61 F10 L13
    Date: 2013–07
  23. By: Erich Battistin (University of Padova); Paolo Bortoluzzi (University of Padova); Fabio Buttignon (University of Padova); Martina Serafini (University of Padova); Marco Vedovato (University of Venice)
    Abstract: This paper investigates the differential effects on performance of majority and minority Private Equity (PE) investments. By using a difference in difference approach, we compare a sample of 191 firms in the years following the PE investment with a control group constituted by firms that are the most similar to targets in the years preceding the deal. We find that, in the three years following PE investments, targets achieve higher profitability, higher sales and employ more than their control counterparts, and this is more so for minority deals. We also show that PE targets experience a significantly higher board turnover than controls, and that changes are more pronounced in majority investments where both the CEO and the chairman are replaced. Moving to targets ownership types, we find that PEs are especially effective when they acquire a minority interest in family firms or, to some extent, when they take a majority stake in non-family firms. These results suggest that when dealing with family firms PEs are particularly beneficial when they tend to complement rather than substitute the incumbent human capital, namely the entrepreneurs/owners serving as CEO or chairman before the PE steps in.
    Keywords: Private Equity, Minority Investments, Private Firms, Firm Performance, Corporate Governance. JEL: G32, G34.
    Date: 2013–07

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